TaxTMI 
TaxTMI 
2021 (11) TMI 502
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....he disallowance of Rs. 5,47.631/- made u/s. 36[1][va] of the Act, based upon the details in the Tax Audit Report of the Chartered Accountant in Form 3CD, under the facts and in the circumstances of the appellant's case. 3. The learned CIT[A]/NFAC ought to have appreciated that the aforesaid disallowance of Rs. 5,47,631/- in respect of the belated payments of the Employee's share of PF and ESI was allowable having regard to the judgment of the Hon'ble Karnataka High Court in the case of Essae Teroka Limited reported in 366 ITR 408 [Kar] since the same has been paid before the due date for filing the return of income u/s. 139(1) of the Act and hence, the disallowance made ought to have been deleted. 4. The learned CIT[A]/NFAC is not justified in holding that the amendment made by insertion of Explanation 2 to the provisions of section 36[1][va] of the Act and the insertion of Explanation 5 to section 43B of the Act by the Finance Act, 2021 with effect from 01/04/2021 was clarificatory/declaratory in the nature and therefore, these amendments were retrospective in operation under the facts and in the circumstances of the appellant's case. 4.1....
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.... the judgment of the Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT, reported in 366 ITR 408. The CIT(A), after noticing the judicial pronouncements in favour of the Revenue, concluded that amendment to sections 43B and 36[1][va] of the Act by Finance Act, 2021, is clarificatory and has got retrospective operation. 5. Aggrieved, assessee has filed this appeal before the Tribunal. The learned AR relied on the ITAT's Order in the case of M/s. Shakuntala Agarbathi Company Vs. DICT in ITA No. 385/Bang/2021 (order dated 21.10.2021). Learned DR on the other hand relied on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., reported in 304 ITR 308 (SC) and submitted that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is clarificatory and has got retrospective operation. The AR in rejoinder submitted the case law relied on by the learned DR viz., CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is distinguishable on facts. It was submitted that the conclusion of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is based on settled positio....
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....ded in sub para (1), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word "contribution" used in Clause (b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section (1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr. Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view t....
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....ect the A.O. to grant deduction in respect of employees' contribution to ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) of the I.T. Act, It is ordered accordingly. 7. The learned DR had relied on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) to hold that the amendment to section 36[1][va] and 43B of the Act is clarificatory. The judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coin Health Food Pct. Ltd. (supra) is distinguishable. The Hon'ble Apex Court was considering the question of whether penalty can be imposed u/s. 271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "....
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....ts and gains' refers to positive income whereas losses represent negative profit or in other words minus income. This aspect does not appear to have been noticed by the Bench in Virtual's case (supra). Reference to the - order by this Court dismissing the revenue's Civil Appeal No. 7961 of 1996 in Commissioner of Income Tax v. Prithipal Singh and Co. is also not very important because that was in relation to the assessment year 1970-71 when Explanation 4 to Section 271(1)(c) was not in existence. The view of this Court in Horprasods case (supra) Leads to the irresistible conclusion that income also includes Losses. Explanation 4(a) as it stood during the period 1.4.1976 to 1.4.2003 has to be considered in the background. 8. It appears that what the Finance Act intended was to make the position explicit which otherwise was implied. The recommendations of the Wanchoo Committee pursuant to which Explanation 4(a) was inserted w.e.f. 1.4.1976 needs to be noted. At para 2.74 it was noted as follows: "2.74 We are not unaware that linking concealment penalty to tax sought to be evaded can, at times, lead to anomalies. We would recommend that, in cases where th....
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.... stands reduced and even if the final assessed income is a loss, still penalty was leviable thereon even during the period 1.4.1976 to 1.4.2003. Even in the Circular dated 24.7.1976, referred to above, the position was clarified by Central Bureau of Direct Taxes (in short CBDT). It is stated that in a case where on setting of the concealed income against any loss incurred by the assessee under any other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case "the tax sought to be evaded" will be tax chargeable on concealed income as if it is "total income"." 8. Thus, the judgment of the Hon'ble Apex Court in CIT Vs. Gold Coin Health Food [P.] Ltd., [2008] 304 ITR 308 [SC], took into consideration the evolved jurisprudence on the point of whether income includes loss and has interpreted that even before the amendment with effect from 01.04.2003, there was liability to penalty. Hence, it was concluded by the Hon'ble Apex Court that the clarificatory nature of the amendment cannot be a ground to hold that earlier no penalty co....
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....and a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of 'Interpretation of Statutes'. Vis-a-vis. ordinary prose, legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 31. Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today rind in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should 'not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phi....
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....t. If legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally and where to confer such benefit appears to have been the legislators object, then the presumption would be that such legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India Et. Ors. v. Indian Tobacco Association', the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra Et. Ors." It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here......" 10. The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) considered the judgment of the H....